BUSINESS DECISION MAKING

ASST. PROF. AKHIL SKARIA

SELF INTRODUCTION
LEARNING OUTCOMES

LO1 LO2 LO3 LO4

Be able to Understand Be able to Be able to
use a variety a range of produce use
of sources techniques information software-
for the to analyze in generated
collection of data appropriate information
data, both effectively formats for to make
primary and for business decision decisions in
secondary. purposes. making in an an
organization organization.
al context.
LO1- BE ABLE TO USE A VARIETY OF SOURCES FOR THE
COLLECTION OF DATA, BOTH PRIMARY AND SECONDARY.

1. Create a plan for the collection of primary and secondary

data for a given business problem.
2. Present the survey methodology and sampling frame used.
3. Design a questionnaire for a given business problem.
WHAT IS DATA?

 Data can be termed as “ A scientific term for

facts, figures, information and
measurements. (BPP Learning Media, 2010)
 Facts and statistics collected together for
reference or analysis. (Oxford Dictionary)
EXAMPLES OF DATA

 The number of women who pass their driving test

each year,
 The number of goals scored by each football team in
the top division for the last season.
 The profit after tax for the past ten years of the four
biggest supermarket chains.
TYPES OF DATA

Attribut Variable
es s
TYPES OF DATA- ATTRIBUTES

 An attribute is something an object either

has or doesn't have.
 This type of data is qualitative.
 An attribute cannot be measured. For
example, an individual is either male or
female. There is no measure of how male
or how female somebody is: the sex of a
person is an attribute.
TYPES OF DATA- VARIABLES

 A variable is something which can be measured

 This type of data is quantitative.
 For example, the height of a person is a variable
which can be measured according to some scale
(such as centimetres).
TYPES OF VARIABLE DATA

Discrete variables Continuous

• Discrete variables variables
can only take a finite • Continuous variables
or countable number may take on any
of values within a value. They are
given range measured rather than
counted.
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SOURCES OF DATA

Externa
Internal l
SOURCES OF DATA - INTERNAL

 Internal data relate to activities or transactions performed within

the organisation, e.g. administrative tasks such as
correspondence or payroll calculations, the production of
products and services, or the sale of those products.
 Often these activities generate costs and revenues, so much of
the internal data collected will be quantitative.
SOURCES OF DATA- EXTERNAL
 Organizations need to collect data relating to the outside world or
the 'environment' of the organisation.
 Data relating to the environment of an organization might be
classified under the following headings:
(a) Political (such as government policy)
(b) Economic (such as inflation or exchange rates)
(c) Social (such as buying-patterns or fashion)
(d) Technological (such as materials and production methods)
(e) Competitive (such as the behavior of customers, suppliers and
rivals)
TYPES OF EXTERNAL DATA

Informa
Formal l
DATA WAREHOUSE

A data warehouse consists of a database, containing data from

various operational systems and reporting and query tools.

Some of the sources include - Sales order processing system, nominal

ledger entries, credit card transactions etc.
DATA MINING

Data mining is the analysis of large pools of data to unearth unsuspected or unknown relationships,
patterns and associations that can be used to guide decision-making and predict future behaviour.

Data mining results include the following.

 Associations – or when one event can be correlated to another event eg, disposable nappy purchasers
buy baby wipes a certain percentage of the time.
 Sequences – or one event leading to another later event eg, a pay rise followed by an increase in
productivity.
 Classification – or the recognition of patterns and a resulting new organization of data eg, profiles of
customers who make purchases.
 Clustering – or finding and visualizing groups of facts not previously known. A data mining tool will
discover different groupings within data.
 Forecasting – or simply discovering patterns in the data that can lead to predictions about the future.
TYPES OF RESEARCH
DESCRIPTIVE RESEARCH
• Includes surveys and fact-
finding enquiries of
different kinds.
• Major purpose: description
of the state of affairs as it
exists at present. Mostly
used in social science and
market research.
• Ex Post Facto research.
• No control over the
variables.
• Only report what has
happened or what is
happening.
ANALYTICAL RESEARCH APPLIED RESEARCH
• Researcher has to use facts • Action research.
or information already • Finding a solution for an
available. immediate problem facing
• Analyze these to make a a society or an
critical evaluation of the industrial/business
material. organization. Research
concerning some natural
phenomenon or relating to
pure mathematics.
• Central Aim: Discover a
solution for some pressing
practical problem.
TYPES OF RESEARCH
FUNDAMENTAL RESEARCH
• Pure or basic research.
• Concerned with
generalizations and with
the formulation of a theory.
• Central Aim: Finding
information that has a
broad base of applications.
CONCEPTUAL RESEARCH EMPIRICAL RESEARCH
• Related to some abstract • Relies on experience or
idea(s) or theory. observation alone, often
• Used by philosophers and without due regard for
thinkers to develop new system and theory.
concepts or to reinterpret • Data based, coming up
existing ones. with conclusions which can
be verified and observation
or experiment.
• Experimental type
research.
• Working hypothesis or
guess as to the probable
results.
• Experimenter’s control over
the variables under study.
TYPES OF RESEARCH
QUANTITATIVE RESEARCH
• To quantify data and generalize results from
a sample to the population of interest.
• To measure the incidence of various views
and opinions in a chosen sample.
• Sometimes followed by qualitative research
which is used to explore some findings
further.
• Large number of cases representing the
population of interest.
• On-street or telephone interviews.
• Statistical data is usually in the form of
tabulations.
• Used to recommend a final course of action.
QUALITATIVE RESEARCH
• To gain an understanding of underlying
reasons and motivations.
• To provide insights into the setting of a
problem, generating ideas and/or
hypotheses for later quantitative research.
• To uncover prevalent trends in thought and
opinion. Usually a small number of
nonrepresentative cases. Respondents
selected to fulfil a given quota.
Unstructured or semi-structured
techniques like group discussions.
• Non-statistical.
• Exploratory and/or investigative.
• Develop an initial understanding and
sound base for further decision making.
TYPES OF DATA COLLECTION
Primary Data
Primary data are collected especially for the
purpose of whatever survey is being
conducted.
Methods to obtain primary data include
Questionnaires, Observations,
Experimentations, Consumer Panels, Trade
Audits, Case Studies etc.
Secondary Data
Secondary data are data which have already
been collected elsewhere, for some other
purpose, but which can be used or adapted
for the survey being conducted.
Previous research, Official statistics, Mass
media products, Government reports, Web
information etc.
 SOURCES OF PRIMARY DATA

Observations Experimentation Survey Method Qualitative

Techniques
• Sample data • Customer • Includes • Expensive methods
where preference- ’blind’ Questionnaires and • More reliable and
quantitative data testing. Interviews. valid results.
is required. • A quick, cheap • Psychographic test,
• Eg. Number of method of focus groups, field
people wearing conducting a survey. research, etc.
yellow shirt, • Can suffer from
number of defects:
customer entering • Difference in
in a shop, etc. interpretation of
questions.
• Partly completed or
not filled forms.
• Misleading
 SOURCES OF PRIMARY DATA
Consumer Panels
• Cross-section of consumers.
• Giving regular information about their
attitudes or buying habits through personal
visits or mail questionnaires. Diary keeping.
Long-term or short-term period.
Trade Audits or Retail Audits
• Among panels of wholesalers or retailers.
• Retail audit providing continuous monitoring
of retail activity.
• Changes in retail sales-early warning signs.
Long-term trends in the market. Changes in
pricing policy, sales promotion or
advertising, distribution policy, package
design or product design.
SOURCES OF SECONDARY DATA
Internet
Search engines like google, bing, ask.com, yahoo, Britannica, Reuters, BBC, etc.

Online Data Bases and Market Data

Dun and Bradstreet, www. dialog.com, www. marketresearch.com, markets.wsj.com ,etc

Government Data and Official Publications

http://www.planning.gov.mv/en/, www.tsoonline.co.uk, MMA annual economic review, etc.

Internal and by-product data

Account department- Accounting policies, tax details, management accounts and balance
sheets.
Sales and marketing department- sales by customer and by product, competitor intelligence,
customer complaints, marketing research and prospects reports ,etc.
Production and operations- flow charts, input prices and product costing's, transport costs, etc.
Human resources department- number of employees, recruitment procedures, training
programs, staff turnover, details and details of pay.
ACTIVITY FOR TODAY

 Find a viable business opportunity in the island of Male.

ACTIVITY

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SAMPLING

POPULATION
The total of all the individuals who have certain characteristics and are of interest to a
researcher.
SAMPLING
Process of selecting units (e.g., people, organizations) from a population of interest so that by
studying the sample we may fairly generalize our results back to the population from which
they were chosen.
SAMPLE
Set of data collected and/or selected from a statistical population by a defined procedure.
SAMPLING FRAME

A sampling frame is a numbered list of all the items in the population.

If random sampling is used then it is necessary to construct a sampling frame. Once this has been made,
it is easy to select a random sample, simply by generating a list of random numbers.

Eg: voters list

CHARACTERISTICS OF A SAMPLING FRAME

A sampling frame should have the following characteristics.

(a) Completeness. Are all members of the population included on the list?
(b) Accuracy. Is the information correct?
(c) Adequacy. Does it cover the entire population?
(d) Up-to-dateness. Is the list up-to-date?
(e) Convenience. Is the sampling frame readily accessible?
(f) Non-duplication. Does each member of the population appear on the list only once?
TYPES OF SAMPLING
Non-
Probabilistic Probabilistic
Sampling Sampling
Simple random sampling Quota sampling
Systematic sampling Convenience sampling
Stratified sampling Purposive sampling
Cluster sampling
Multi-stage sampling
PROBABILITY VS NON-PROBABILITY SAMPLING

 Probability sampling: Each element has a known probability of being included in the
sample. – You have a complete sampling frame. – You can select a random sample from
your population. – You can generalize your results from a random sample – Can be more
expensive and time-consuming
 Non-probability sampling: Do not allow the researcher to determine the probability of
providing equal chance to be included in the sample. – Used when there isn’t an exhaustive
population list available. – Not random. – Can be effective when trying to generate ideas
and getting feedback. – More convenient and less costly
SIMPLE RANDOM SAMPLING

 Each element in the population has an equal probability of selection AND each combination
of elements has an equal probability of selection
 Names drawn out of a hat
 Random numbers to select elements from an ordered list.
STRATIFIED RANDOM SAMPLING

 Divide population into groups that differ in important ways

 Basis for grouping must be known before sampling
 Select random sample from within each group.
SYSTEMATIC RANDOM SAMPLING

 Each element has an equal probability of selection, but combinations of elements have
different probabilities.
 Population size N, desired sample size n, sampling interval k=N/n.
 Randomly select a number j between 1 and k, sample element j and then every kth
element thereafter, j+k, j+2k, etc.
 Example: N=64, n=8, k=64/8=8.
 Random j=3
RANDOM CLUSTER SAMPLING

 Also known as area sampling.

 Grouping the population and then selecting the groups or the clusters rather than
individual elements for inclusion in the sample.
 Departmental store, sample credit card holders.
 Credit card issued: 15000, sample size= 450, cluster of 150 customer each.
 15000/100= 150 i.e. 100 groups of 150 customers.
 Any 3 clusters might be selected now.
NON-PROBABILITY SAMPLING
Convenience sampling

• Sample is selected on the basis of ease of access.

• No reason tied to purposes of research.
• Students in your class, people on State Street, friends.

Purposive sampling
• Only few on the basis of the purpose of research.
• Own judgments of researcher for selecting.

Quota sampling
• Pre-plan number of subjects in specified categories.
• Actual selection of items for sample being left to the interviewer’s judgment.
• Size of the quota for each stratum is generally proportionate to the size of that stratum in
the population.
ERRORS IN SURVEY METHODS OF
DATA COLLECTION

Sampling error Response error Non-Response error

• Sample of the • Not able to respond. • Respondent refused

population Response just as a to take part or are
surveyed is not formality. not at home.
representative of • Not able to
the population understand the
from which it is context of the
drawn. questions.
• Due to time,
privacy, etc.
DISCUSSION OF ASSIGNMENT BRIEF
STAGES IN RESEARCH PROCESS
Stage 1:
Stage 6:
Problem
Research
Formulatio
Report
n
Stage 5:
Stage 2: Analysis
Literature and
Review Interpretati
on
Stage 3:
Stage 4:
Research
Data
Methodolog
Collection
y
STAGE 1 – PROBLEM FORMULATION

Management problems should be translated into the research problem. Problem need to be
understood, the causes been diagnosed and solutions developed.
Steps to formulate the research problems:

 Review the Environment or Context of the Problem

 Explore the Nature of the Problem
 Specify the Problem Statement
 Specify research question and research objectives.
ACTIVITY

 Prepare a problem statement for the business opportunity that you have decided on.
 Formulate a research question.
 Draft three research objectives.
STAGE 2 – LITERATURE REVIEW

 Once the problem is formulated, a brief summary of it should be written down. At this
juncture the researcher should undertake extensive literature survey connected with the
problem.

 For this purpose, the abstracting and indexing journals and published or unpublished
bibliographies are the first place to go to. Academic journals, conference proceedings,
government reports, books etc., must be tapped depending on the nature of the problem.
STAGE 3 : RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. In it we study the
various steps that are generally adopted by a researcher in studying his research problem
along with the logic behind them.
The various parts of research methodology are,
 Research Design
 Methodological Approaches
 Research Method/Scientific Method
 Research Instruments
 Sampling
RESEARCH DESIGN

Plan or framework for conducting the study and collecting data.

Defines specific methods and procedures use to acquire the information as per the need.

Types of research design:

 Exploratory research studies
 Descriptive research studies
 Hypothesis-testing research studies
METHODOLOGICAL APPROACHES

There are two types of methodological approaches.

Quantitative
The former involves the generation of data in quantitative form which can be subjected to
rigorous quantitative analysis in a formal and rigid fashion. This approach can be further sub-
classified into inferential, experimental and simulation approaches to research.
Qualitative
Qualitative approach to research is concerned with subjective assessment of attitudes,
opinions and behaviour. Research in such a situation is a function of researcher’s insights and
impressions. Such an approach to research generates results either in non-quantitative form
or in the form which are not subjected to rigorous quantitative analysis.
SCIENTIFIC METHOD- HYPOTHESIS TESTING RESEARCH

 Refers to the method of investigation to be used.

 Starting point would be the existing knowledge and then proceed impartially.
 There are various steps in the scientific methods of enquiry,

Step 1 - Observation
Step 2 - Formulation of Hypothesis
Step 3 - Prediction of the Future
Step 4 - Testing the Hypothesis
EXAMPLE OF SCIENTIFIC METHOD OF ENQUIRY
SAMPLING

The choice of sampling method would be selected from the following methods which were
discussed previously. Non-
Probabilistic Probabilistic
Sampling Sampling
Simple random sampling Quota sampling
Systematic sampling Convenience sampling
Stratified sampling Purposive sampling
Cluster sampling
Multi-stage sampling

A sample would should also be determined , Eg. Sample of 30 tourists who is currently visiting
Maldives.
RESEARCH INSTRUMENTS

 At this stage, decision regarding the various instruments that would be used for the
collection of data and its analysis should be decided.
 Some of the various instruments that would be used includes questionnaires and
interviews for data collection.
 Statistical tools such as mean, median, mode would be used for the data analysis. Financial
tools such as NPV , IRR etc. can also be used.
ACTIVITY

Prepare a Gantt Chart for the stages of Research Process

STAGE 4 – DATA COLLECTION

The data collected would be from two main sources

 Primary sources
 Secondary sources

Maximum time and cost is consumed.

Various data collection methods include,
(i) observation method, (ii) interview method, (iii) through questionnaires, (iv) through
schedules, and (v) other methods which include (a) warranty cards; (b) distributor audits; (c)
pantry audits; (d) consumer panels; (e) using mechanical devices; (f) through projective
techniques; (g) depth interviews, and (h) content analysis.
STAGE 5 DATA ANALYSIS AND INTERPRETATION

 Selection of right analysis techniques.

 Effectiveness depends on the type of information been collected and measurement used.
 Use of tools like:

Spreadsheets
Graphs and charts
Special softwares.
STAGE 6: RESEARCH REPORT

 Last and final stage of research process.

 Included: Accurate description of your research process, the results, conclusions, and
recommended courses of action.
 Provide all the information the decision maker needs to understand the project.
 Written in language that is easy to understand.
QUESTIONNAIRE

 Must keep in view the problem to be studied.

 Appropriate form of questions depending of information sought.
 Preparing rough draft of the questionnaire.
 Re-examine the rough draft to detect and remove technical defects.
 Take up the pilot-study for pre-testing the questionnaire.
 Questionnaire must contain simple and straight forward questions.
THE DO’S

 Start your questionnaire with a title and introduction

 Provide confidentiality and anonymity
 Follow the KISS Theory (Keep It Sweet & Simple)
 Write questions and responses with clear objectives, concise language, complete sentences,
correct grammar, and simple words
 Be specific in asking each question
 Leave some room for personal and confidential questions at the beginning or at the end of the
questionnaire
 Design responses that are mutually exclusive
 Allow “don’t know” and “not applicable” responses where appropriate
 Test your questionnaire before making a survey
THE DON'TS

 Don’t be vague
 Don’t ask double-negative questions (e.g.: The pilot can’t find no place to land.)
 Don’t use many abbreviations, acronyms, or jargon
 Don’t ask objectionable questions
 Don’t ask open-ended questions unless necessary
 Don’t ask “double-barreled questions” (Eg: How satisfied are you with your pay and job
conditions)
 Don’t ask hypothetical questions
 Don’t ask respondents to make unnecessary calculations
TYPES OF QUESTIONS

Open ended questions Closed ended question Partially Closed-ended

• Ones that require more • Limit the number of • Have the feature of both
than one word answers answers. open-ended and closed-
• Answers could come in • List of answers and ended questions.
the form of a list, a few respondents select either • Explanation of choice is
sentences or a one or multiple responses. asked from the respondent.
paragraph. • More uniform result and
• Not pre-categorized. easy in analyzing result.
• Avoid asking open • Responses should be
ended questions. exhaustive and mutually
• Eg. What is aim for exclusive.
studying business • Answers in “Yes” or “No”.
management? What are
your recommendations
for improvement? Etc.
ACTIVITY

 Design a questionnaire so that you can distribute among people and collect Primary Data.
 The questionnaire should contain 20 questions each.